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TMI Blog1993 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Rs. 22,000 received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally should not be brought to tax ?" The assessment year concerned is 1973-74. The assessee, G. R. Karthikeyan, assessed as an individual, was having income from various sources including salary and, business income. During the accounting year relevant to the said assessment year, he participated in the All India Highway Motor Rally. He was awarded the first prize of Rs. 20,000 by the Indian Oil Corporation and another sum of Rs. 2,000 by the All India Highway Motor Rally. The rally was organised jointly by the Automobile Association of Eastern India and the Indian Oil Corporation and was supported by several regional automobile associations as well as the Federation of. Indian Motor Sports Clubs and the Federation of Indian Automobile Associations. The rally was restricted to private motor cars. The length of the rally route was approximately 6,956 kms. One could start either from Delhi, Calcutta, Madras or Bombay, proceed anti-clockwise and arrive at the starting point. The rally was designed to test endurance driving and the reliability of the automobiles. One had to drive on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 74A, which too was introduced by the Finance Act, 1972, supports the said view. Section 74A provides that any loss resulting from any of the sources mentioned therein can be set off against the income received from that source alone. The sources referred to in the said section are the very same sources mentioned in sub-clause (ix) of section 2(24), namely, lotteries, crossword puzzles, races including horse races, card games, etc. The correctness of the view taken by the High Court is questioned herein. The definition of " income " in section 2(24) is an inclusive definition. Parliament has been adding to the definition by adding sub-clause(s) from time to time. Sub-clause (ix), which was inserted by the Finance Act, 1972, reads as follows : " (ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever ; " We may notice at this stage a provision in section 10. Section 10 occurs in Chapter III which carries the heading " Incomes which do not form part of total income". Section 10 in so far as is relevant reads thus " 10. Incomes not included in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come' is understood in a wide sense so as to include a capital gain. Reference may be made to Eisner v. Macomber [1919] 252 US 189 ; Merchants' Loan and Trust Co. v. Smietanka [1920] 255 US 509 and United States of America v. Stewart [1940] 311 US 60 and Resch v. Federal Commissioner of Taxation [1943] 66 CLR 198. In each of these cases a very wide meaning was ascribed to the word 'income' as its natural meaning. The relevant observations of the learned judges deciding those cases which have been quoted in the judgment of Tendolkar quite clearly indicate that such wide meaning was put upon the word 'income' not because of any particular legislative practice either in the United States or in the Commonwealth of Australia but because such was the normal concept and connotation of the ordinary English word 'income'. Its natural meaning embraces any profit or gain which is actually received. This is in consonance with the observations of Lord Wright to which reference has already been made.... The argument founded on an assumed legislative practice being thus out of the way, there can be no difficulty in applying its natural and grammatical meaning to the ordinary English word 'income' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pears that subclause (ix) is not confined to mere gambling or betting activities. But, says the High Court, the meaning of all the aforesaid words is controlled by the word "winnings"' occurring at the inception of the subclause. The High Court says, relying upon certain material, that the expression "winnings" has come to acquire a particular meaning, viz., receipts from activities of a gambling or betting nature alone. Assuming that the High Court is right in its interpretation of the expression "winnings", does it follow that merely because winnings from gambling/betting activities are included within the ambit of income, the monies received from non-gambling and non-betting activities are not so included ? What is the implication flowing from the insertion of clause (ix) ? If the monies which are not earned - in the true sense of the word -constitute income why do monies earned by skill and toil not constitute income ? Would it not look odd, if one is to say that monies received from games and races of gambling nature represent income but not those received from games and races of non-gambling nature ? The rally in question was a contest, if not a race. The respondent-assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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